John Woods: Yes, I agree with all of that. I would say that even with a little bit of lighter loan demand, we still think that range is good. Maybe it comes out at a higher end versus the lower end. But I mean I think that’s a swing factor. All the other components of the balance sheet are playing out well. Our outlook for deposit mix and funding mix is underpinning the net interest margin. I would hasten to add that those pay-fixed swaps that we added last quarter in 1Q and also in 4Q, have really driven really nice uptake in the securities yield. You see the securities yields up almost 40 basis points in the first quarter, and that’s offsetting – that’s a huge component of our balance sheet, and that’s a big driver.
And then I should also make clear that the core balance sheet is contributing as well where we are seeing front book, back book on the loans side that is in the range of 300 basis points in the first quarter. And you are getting front book back on the securities book of around 200 basis points. So, there are good dynamics in the core balance sheet and all of the swaps were baked in.
Ken Usdin: You said we could come in at the higher end. I think you meant the better end.
John Woods: Yes.
Ken Usdin: Just for everybody’s clarity on that plan. Okay.
Operator: Your next question will come from the line of Matt O’Connor with Deutsche Bank. Your line is now open.
Matt O’Connor: Good morning. Most of my questions have been answered, but I am curious when you talk about kind of this medium-term net interest margin. What are your thoughts on the size of the balance sheet? And I guess, specifically, like do you think the overall balance sheet will grow or is there the remixing, Clearly, you are running off the non-core book [ph] on the private bank. But do you envision kind of net balance sheet growth as you look out the next few years? Thank you.
John Woods: Yes. I would say that, we do expect the balance sheet to grow. It’s – I think we do have a balance sheet optimization program that’s turning over a certain portion of the portfolio. But when you look at the grand total of the initiatives that we are putting in place, I think you see interest-earning assets will be growing in the second half of the year. And as you get out over the medium-term, so I think that we have the opportunity to optimize and grow. And that’s our expectation.
Bruce Van Saun: Yes. I would say the kind of flex point is kind of middle of the year when we have done a lot of that heavy lifting on the repositioning, and then we start to see the private bank growth in commercial bank as we discussed, start to kick in. So, we should see net growth already in the second half of the year. And then kind of looking out ‘25 to ‘27, we would expect in a strong economy that we could get back to reasonably strong growth rates. Again, being selective where we play, focusing on primary relationships and primacy, but there is no reason we couldn’t grow back at nominal GDP the way we did for kind of many years before we hit the pandemic, and that plays into math that, the delivery of positive operating leverage, which is part of how you get your return on equity up. And so that’s the model we would like to get back to.
Matt O’Connor: Got it. Thank you.
Operator: Your next question will come from the line of Gerard Cassidy with RBC. Your line is now open.
Unidentified Analyst: Hi. Good morning. This is Thomas Detry [ph] calling on behalf of Gerard. Circling back to capital deployment quickly, you guys were pretty busy in 2023 in terms of strategic actions. Can you update us on how you are thinking about further investment opportunities for the franchise and how you guys prioritize organic growth versus team lift outs or even outright M&A?
Bruce Van Saun: Yes. So, I would say that right now, we have a very full plate in terms of the things that we are investing in the organic growth initiatives we have. So, I would not – we are not really looking much at inorganic situations or opportunities. And so I want to just stay focused on great execution. There is a big pay-off for getting these initiatives right and they are all kind of on the trend line. I would say team lift outs, you mentioned is something that we are hinting at, at this point because while we have the private bank in place, and we have kind of Clarfeld as part of a private wealth complex, we need to scale up our private wealth capabilities to a large extent. And so we are having discussions with teams.
And you can watch this space because I think you will start to see us build that part of the business out. But again, it will be prudent. We will treat them like they are kind of M&A transactions that are accretive and they fit our strategy and they are good cultural fits, but that’s kind of the only thing I would say that we are looking kind of outside. And to some extent, that’s organic. You could argue whether that’s organic or whether it’s acquisition like, but we are kind of using the same acquisition lens on these as if they were small deals. I don’t know, Brendan, if you want to put any color on that.
Brendan Coughlin: Maybe two quick points, one is that I would just say the interest in Citizens from a wealth management perspective is at a high, like we have never seen before. So, we are talking to some of the very best wealth managers across all the big brands in the United States. And so we are going to be very selective. But the interest in what we are doing here is quite unique and distinctive. So, we expect to board some top talent and really give a boost to our wealth strategy. But the point around capital that you mentioned, though, just to – even though we are mentally potentially thinking about the return metrics like we would an M&A deal. Keep in mind that a lift out or what we do with the private bank really is a very de minimis impact on capital.
